CUE - 3 Biotech Stocks to Buy as Companies Ink Major Deals

2023-06-22 06:40:45 ET

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With patent expirations around the corner, some of the biggest pharmaceutical and biotech companies will soon face generic competition, creating a big opportunity for these top biotech stocks to buy.

In 2023 alone, pharmaceutical and biotech companies spent about $85 billion on acquisitions . That’s well above the $35 billion worth of deals done in 2022, and the $49 billion worth of deals in 2021, as noted by analysts at Stifel. But that’s just the start.

For example, AbbVie’s Humira, for example, will soon face biosimilar competition . Merck will eventually lose exclusivity with Keytruda . Bristol-Myers will lose exclusivity with its cancer therapy, Revlimid .

So, with trillions in cash on hand, major companies are on the hunt to replenish. That being said, here are three of the top biotech stocks to buy.

Viking Therapeutics (VKTX)

Since the year began, shares of Viking Therapeutics (NASDAQ: VKTX ) exploded from about $8 to about $25 a share. All thanks to its potential treatment for obesity, VK2735.

So far, we know it works much like Eli Lilly’s (NYSE: LLY ) Mounjaro, which stimulates incretin hormones, GLP-1, and GIP . We also know VK2735 triggers a feeling of fullness in the body after eating, which can lead to potential weight loss.

Confirming that, the company’s Phase 1 trials found that patients treated with VK2735 lost 6% in mean body weight, as compared to a placebo. As the company nears Phase 2 trials, analysts like what they’re seeing, too.

H.C. Wainwright, for example, just raised its price target on VKTX to $33. Roth MKM just raised its price target to $24 from $19 on the obesity story.

If treatment is eventually approved by the US FDA, we could see a blockbuster trade here. Remember, according to the World Health Organization , obesity has tripled since 1975.

More than 1.9 billion adults were overweight, as of 2016, with more than 650 million considered obese. Plus, more than 340 million children were overweight in 2016, as well. It’s an issue that’s been plaguing society for quite some time. Worse, by 2030, about 20% of the global population will be obese, according to the National Centers for Biotechnology Information.

Cue Biopharma (CUE)

Or, take a look at Cue Biopharma (NASDAQ: CUE ), which I mentioned on May 26.

The clinical-stage biopharmaceutical company is trying to bring a new class of immunotherapies to those impacted by cancer.

Helping, the company already received FDA acceptance of its Investigational New Drug (IND) application for CUE-102 in Wilms’ Tumor 1 (WT1)-expressing cancers. It was also granted Fast Track Designation for CUE-101 for the treatment of HPV+ recurrent/metastatic head and neck squamous cell carcinoma (R/M HNSCC) as a monotherapy and in combination with pembrolizumab.

Axsome Therapeutics (AXSM)

Axsome Therapeutics (NASDAQ: AXSM ) is another prime target. Having gained big recognition for its treatments for difficult-to-treat conditions, it already has two products on the market.

One of those is Auvelity, which is used to treat treatment-resistant depression- which impacts 30% of those diagnosed with depression. The treatment is also used for major depressive disorder, which impacts more than three million people in the U.S. each year.

Its other product is Sunosi, which helps improve excessive daytime sleepiness associated with narcolepsy or obstructive sleep apnea ( OSA ). Even better, it’ll be a long time before AXSM runs into any patent expiration issues.

Aside from those two, the company has a big pipeline of potential treatments for narcolepsy, Alzheimer’s disease agitation, and multiple sclerosis cognitive dysfunction. All of which could hold blockbuster potential.

Analysts like the stock here, too. Morgan Stanley recently raised its price target to $87 from $83. Guggenheim raised its target to $100 from $90. Mizuho raised from $84 to $95.

On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines .

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